Brokerage firm Nuvama Institutional Equities has raised its target price on Dixon Technologies to ₹14,800 from ₹13,700 while maintaining its 'hold' rating. The revision reflects the company's expanding component business and growth prospects in telecom and IT hardware segments. Despite the positive outlook for FY28, Nuvama has cut FY27 EPS estimates by 7% due to a likely delay in the Vivo JV consolidation. The brokerage expects the business to contribute to Dixon's growth once operations commence, with the estimates reflecting the changing mix of Dixon's business where telecom, IT hardware and components are becoming increasingly important alongside traditional smartphone manufacturing operations.
According to Business Upturn, Nuvama expects smartphone industry volumes to decline 15-20% year-on-year in Q2 FY27, driven by continued demand weakness compounded by higher memory chip prices. Memory is one of the largest single components in a handset bill of materials, so when memory prices rise, either the retail price goes up or the brand's margin goes down — and both outcomes suppress volume. Against this challenging backdrop, Dixon expects to make 33 million smartphones in FY27, representing a flat-to-growing number in a market shrinking by 15-20%. A flat-to-growing number in a declining market can only come from share gains, as brands consolidate assembly with fewer, larger contract manufacturers. This structural shift reduces dependence on the single, cyclical, low-margin smartphone category.
As reported by CNBC TV18, in its interaction with Dixon Tech management, Nuvama learned that the Dixon-Vivo JV commercialization is likely to be in the third quarter of FY27 instead of October 2026, as was planned earlier. This delay in the Vivo consolidation has made the second half of the year weaker for Dixon than the first half. The brokerage noted that the company's export realizations are becoming difficult, making the company's export volume and price-growth targets harder to achieve. According to Business Upturn, the delay prompted Nuvama to reduce its FY27 earnings estimate, although it expects a faster scale-up in the following financial year. The JV is now expected to begin operations in Q3 FY27, later than previously anticipated, with Nuvama saying the delay has had an impact on its near-term earnings estimates.
According to reports from CNBC TV18, Nuvama highlighted the management's views on the smartphone market, which has been weak in the second quarter of this fiscal so far, declining 15-20% year-on-year. However, Dixon Tech said it is likely to gain market share and reiterated its FY27 guidance of 3.3 crore units. The company's telecom business is expected to remain a key growth driver, with revenue projected to increase 40-50% in FY27 to around ₹6,500-7,000 crore. The IT hardware segment is also expected to expand sharply, with Nuvama estimating revenue could increase nearly fourfold in FY27 to around ₹6,000 crore, up 275% from the year-ago period. This mix shift toward components and telecom is the structural argument for the stock, as it reduces dependence on the cyclical, low-margin smartphone category.
As reported by CNBC TV18, shares of Dixon Tech are trading 1.83% lower on Tuesday at ₹13,102, remaining under pressure despite the positive analyst outlook. The stock is down over 10% in the last one month and has gained 8% so far this year. In line with Dixon, shares of other EMS companies such as Kaynes Tech and PG Electroplast are trading with losses between 3% to 4%. A total of 33 analysts have coverage on Dixon Technologies, with 24 of them having 'buy' recommendations, four having 'hold' recommendations and five with 'sell' ratings. The near-term picture remains mixed: weak smartphone demand, a delayed Vivo JV and a tougher export environment are weighing on the outlook, while market-share gains and growth in telecom and IT hardware provide some support.
